By Benjamin Goad - 05/06/13 03:25 PM EDT
Financial regulators unveiled a new set of guidelines for a civil penalty fund created to collect fines from violators of consumer protection law.
One of hundreds of new regulations spawned by the Dodd-Frank Wall Street reform law, the rule lays out the process through which the Consumer Financial Protection Bureau (CFPB) can collect fines from violators and compensate their victims.
The new language sets forth guidelines for how civil penalties would be distributed to victims and how much they are entitled to receive.
Under Dodd-Frank, the CFPB can bring action against any party – whether an individual or a company – found to have violated consumer financial protection laws. The civil penalties collected are to be deposited in the new fund, and every six months, the agency will pay victims, according to the rule.
Victims will be entitled to compensation equal to their “uncompensated harm,” the amount they lost because of an infraction, less any amount they were able to recoup through other means.
In instances where victims cannot be located, the CFPB can choose to spend the money on consumer education and financial literacy programs, according to the rule.
The fund’s administrator will be required to issue regular, publicly available reports on allocations here.
While the rule takes effect immediately, the bureau would consider changes to the rule based on submissions received during a 60-day open comment period starting Tuesday. Interested parties and members of the public can submit comments here, using Docket No. CFPB-2013-0012 or Regulatory Identification Number (RIN) 3170-AA38.
This story was updated at 3 p.m. to clarify the parameters of the new rule.